Commodities Roundup: Steel Imports, Audi’s E-Tron, Automakers Struggle in China

For the buyers and category managers out there, especially those of you deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets.

MetalMiner, a sister site of ours, scours the landscape for what matters. This week:

U.S. steel imports

After last year’s Section 232 tariffs, U.S. steel import levels continue to be lower this year.

After the first half of the year, U.S. steel imports reached 15.62 million tons, down 12.7% compared with the first six months of 2018.

Norsk Hydro Announces Aluminum Supply Deal with Audi

As automaker Audi gets set to produce its first fully electric model, Norsk Hydro will provide the aluminum for battery housing.

The automaker has stated it aims to reduce its carbon dioxide emissions by 15% by 2025 compared with 2015 levels.

Automakers Struggling in China

Whatever your chosen explanation, one thing is clear: Automakers are having some problems in China.

Ford, for example, operated its Chinese plants at just 11% of capacity, and sales for the first half of the year fell 27% on a year-over-year basis.

“The collapse in sales comes particularly hard as foreign firms have been making such stellar returns from the China market,” MetalMiner’s Stuart Burns wrote.

“Volkswagen and General Motors’ Chinese sales accounted for 38% and 23% of the companies’ respective pre-tax profits last year, so losses will be particularly painful.”

Iron Ore Coming Back to Earth

The iron ore price has surged to five-year highs this year, much to the chagrin of steelmakers.

However, that price has begun to come back down, prompting Burns to wonder if it means we’ve already breached peak iron ore — particularly in light of Anglo American’s recent announcement that it will return $1 billion to investors via a share buyback program.

“The move is not in and of itself surprising, as Anglo has made record profits on the back of strong iron ore prices and a stellar rise in palladium prices,” Burns wrote. “The miner reported a 19% increase in underlying earnings to $5.5 billion in the six months to June.

“What is noteworthy is, despite the apparently strong position for both metals, Anglo has made no commitments — not even hints — that it will continue with buybacks in the year ahead.”

Global Crude Steel Production Rises

According to the World Steel Association’s most recent monthly report, global crude steel production for the first half of the year jumped 4.6% on a year-over-year basis.

Production for the half year reached 925.1 million tons. In June, China’s steel production reached 87.5 million tons, marking a 10% year-over-year increase.

Metals Procurement in a Sideways Market

With a large number of metals markets trading sideways, metals procurers can sometimes find themselves in a tough spot with respect to their buying strategy.

The MetalMiner Forecasting Workshop on July 25 hosted a number of metals procurement professionals, who received insight and analysis from the MetalMiner team on the aluminum, copper, lead, tin, zinc, HRC, CRC, HDG, plate and nickel markets.

A second Forecasting Workshop is scheduled for Aug. 7 in Chicago.

Glencore Adjusts Copper Guidance

Glencore on Wednesday announced its first-half 2019 copper production fell 5% on a year-over-year basis.

The miner adjusted its full-year 2019 copper guidance to 1,025 kt (+/- 25), whereas 2018 actual production came in at 1,043 kt.